Latest Legal and Regulatory news update - 31st July

Latest Legal and Regulatory news update - 31st July

 

In this issue:

Risk & Compliance

Financial services

Commercial

Corporate

Information Law & TMT

Employment

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Risk & Compliance

International data transfers

The European Data Protection Board (EDPB) has published Frequently Asked Questions following the judgment in Data Protection Commissioner v Facebook Ireland Ltd and Maximillian Schrems (Schrems II), Case C-311/18. The document answers questions regarding whether the decision has any implications on transfer tools other than the Privacy Shield, what should be done by parties who used Standard Contractual Clauses (SCCs) or Binding Corporate Rules with entities in the US, whether derogations contained in Article 49 of the General Data Protection Regulation, Regulation (EU) 2016/679, can be relied upon when transferring data to the US, and how a controller can know whether a processor who processes data for which the controller is responsible transfers data to the US or another third country. See: LNB News 01/01/0001 2635.

The ICO has published an updated statement on Schrems II. The ICO states: ‘This judgment has wider implications than just the invalidation of the EU-US Privacy Shield. It is a judgment that confirms the importance of safeguards for personal data transferred out of the UK.’ The ICO also confirmed that the EDPB’s FAQs (see above) apply to UK controllers and processors. As such, a risk assessment should be conducted to determine whether SCCs provide enough protection within the local legal framework for international transfers. The ICO is continuing to take a ‘risk-based and proportionate approach’ to discharging its regulatory role. See: LNB News 28/07/2020 2.

You can expect your organisation’s privacy notices to be more closely scrutinised in relation to transfers of personal data outside the UK/EEA. See updated Precedents: Privacy policy—general commercial organisation—customer-facing and Privacy policy—law firms and professional services.

Coronavirus (COVID-19)

The Department of Health and Social Care has released guidance on how to recognise, contain and report incidents of coronavirus (COVID-19). On 27 July 2020, links to specific coronavirus resource centre sections were added to the guidance. See: LNB News 28/07/2020 52

Financial crime prevention

The European Data Protection Supervisor (EDPS) has published a press release on his Opinion, which reacts to the European Commission’s action plan for a comprehensive Union policy on preventing money laundering and terrorism financing (C(2020)2800 final). In his Opinion, the EDPS argues that ‘data protection requirements must go hand in hand with the prevention of money laundering and terrorism financing’. See: LNB News 28/07/2020 50

The Financial Action Task Force (FATF) has announced that it is organising two webinars, to take place on 30 and 31 July 2020 respectively, on the subject of money laundering and terrorist financing in relation to the coronavirus (COVID-19) pandemic. The 30 July 2020 webinar is on the subject of coronavirus and the changing money laundering and terrorist finance risk landscape, whereas the 31 July 2020 webinar will discuss the impact of coronavirus on the detection of money laundering and terrorist financing. Both webinars will be open to both the public and private sectors and will be published on the FATF website as recordings. See: LNB News 28/07/2020 10.

The Home Office has released its year two update to its anti-corruption strategy. The update, which covers the period up to and including 31 December 2019, ‘provides detailed descriptions of activity across the priority areas of the strategy and focuses on a number of key areas’, which include the Home Office’s multilateral work, its Prosperity Fund anti-corruption programme and its beneficial ownership campaign. See: LNB News 23/07/2020 93

Financial services

The Financial Conduct Authority (FCA) has launched its updated Financial Services (FS) Register, including a simpler design and clearer language.  The FS Register can help consumers avoid scams, and enables firms to cross-check references and make their key staff known to customers. See: LNB News 27/07/2020 85


Commercial

Coronavirus (COVID-19)

Business interruption insurance coverage for an ‘incident’ or ‘occurrence’ can not stretch to pandemics as they are not one-off events, Hiscox argued in the ongoing High Court test case between insurers and the Financial Conduct Authority (FCA) over cover for coronavirus (COVID-19) business interruption losses. Hiscox, a defendant alongside seven other insurance companies, also argued that cover did not apply as owners could access their premises, even if they could not use them. See News Analysis: Hiscox cover doesn’t include pandemics as they aren’t ‘incidents’, judges told in FCA test case and Insurance ‘not a lottery’, QBE argues in FCA test case.

Brexit and beyond

HM Revenue & Customs (HMRC), the Department for Environment, Food & Rural Affairs, and the Department for International Trade (DIT) have published new guidance on the list of goods imported into Great Britain from the EU that are controlled to help stakeholders prepare for the end of the transition period. Further new and updated guidance may be issued depending on the precise terms upon which the UK leaves the EU, so stakeholders are advised to monitor these pages for updates. See: LNB News 27/07/2020 57.

DIT has issued an update on the first round of negotiations for a UK-New Zealand Free Trade Agreement (FTA), reporting ‘positive’ and ‘productive’ talks held remotely between 13 and 24 July 2020. The negotiating teams discussed their respective objectives and agreed a forward plan for future talks. Both sides emphasised a desire to be particularly ambitious in areas including enhancing digital trade, boosting cross-border trade in services and investment, reducing uncertainty and burdens on exporters from customs procedures, and promoting good regulatory practices. The government is set to make its next statement on progress following the second round of talks scheduled to take place in October 2020. See: LNB News 29/07/2020 50.

DIT has also announced, at the 14th Joint Economic and Trade Committee (JETCO), that the UK and India have agreed to ‘expanding and deepening’ their trade relationship. It will include an Enhanced Trade Partnership as the first step on the roadmap for a deeper trade relationship, which could eventually lead to a future FTA . At the JETCO meeting, the UK and India also agreed to ‘work towards removing additional barriers’ for businesses across a range of sectors including food and drink, healthcare, life sciences, IT and data and chemicals and services. DIT believes ‘increasing investment in each other’s markets is more important than ever as both economies seek to recover from the impact of Covid-19.’ See: LNB News 27/07/2020 14.

Contracts

New statutory provisions (the Corporate Insolvency and Governance Act 2020 (CIGA 2020)) retrospectively change the way many existing and future contracts work. Businesses urgently need to look afresh not just at supply arrangements but also many other significant transactions of which the supply of goods or services forms part. Hogan Lovells partners, Peter Watts and Richard Diffenthal (both of their Corporate/Commercial teams) and Tom Astle (of their Restructuring and Insolvency team), consider the scope of CIGA 2020, its potential impact on commercial contracts and identify recommended actions that businesses should be taking to best protect themselves in light of the new rules. See News Analysis: Contracts and insolvency—a transformational change (CIGA 2020).

Commercial Analysis: James Petts, barrister at The 36 Group, discusses the effects of section 14 of the Corporate Insolvency and Governance Act 2020 (CIGA 2020) for the supply of goods and services. The analysis touches upon the differing protection available to customers and suppliers, and provides practical guidance for contracting parties in the process of negotiating and drafting new agreements. See: What is the effect of section 14 of the Corporate Insolvency and Governance Act 2020 for contracts for the supply of goods and/or services?


Corporate

Coronavirus (COVID-19)

The European Commission has adopted a capital markets recovery package, as part of the Commission's overall coronavirus recovery strategy. The package aims to make it easier for capital markets to support European businesses to recover from the crisis and proposes targeted changes to the Prospectus Regulation (EU) 2017/1129, Markets in Financial Instruments Directive 2014/65/EU, Securitisation Regulation (EU) 2017/2402 and Capital Requirements Regulation (EU) 575/2013, which are intended to encourage greater investments in the economy, allow for the rapid re-capitalisation of companies and increase banks' capacity to finance the recovery. See: LNB News 24/07/2020 89.

Accounts and reports

The Financial Reporting Council (FRC) has issued two exposure drafts proposing amendments to UK and Ireland accounting standards, FRED 75 and FRED 76. Regarding FRED 75, the FRC proposes to ‘clarify the requirement to assess the going concern basis of accounting’ and ‘require the disclosure of any related material uncertainties’, when financial interim statements are prepared in accordance with Financial Reporting Standard 104. These proposals are expected to apply to interim periods commencing on or after 1 January 2021. For FRED 76, the FRC proposes requirements for accounting for temporary rent concessions for operating leases occurring as a consequence of COVID-19, which are expected to apply to accounting periods starting on or after 1 January 2020. The deadline for comments on these proposals is 1 September 2020. See: LNB News 23/07/2020 111.

Corporate governance

The European Commission has launched an initiative that seeks to require large listed companies, banks and insurance companies to publish information on how, and to what extent, their activities align with those considered environmentally sustainable in the EU taxonomy. The roadmap for this initiative has been published and is open for consultation for six weeks (ie until 8 September 2020). See: LNB News 29/07/2020 68.

Audit

The FRC has issued a final decision notice and imposed sanctions against BDO LLP and David Roberts (a partner at BDO LLP) in relation to the statutory audit of the financial statements of AmTrust Europe Limited for the two financial years to 31 December 2014 and 31 December 2015. The FRC imposed a number of sanctions in light of the breaches which occurred, including (i) a financial penalty of £200,000 (discounted for admissions and early disposal to £160,000), (ii) a reprimand and (iii) two requirements in respect of the audit of insurance undertakings. See: LNB News 29/07/2020 32.


Information Law & TMT

Brexit

The EDPB has published an information note on BCRs for organisations which have the ICO as the competent supervisory authority, explaining steps they need to take if they wish to rely on their BCRs as a valid transfer mechanism for transfers of personal data outside the EEA after the end of the Brexit transition period. See: LNB News 23/07/2020 65.

Copyright

The European Commission has launched the final stage of its stakeholder dialogue on the application of Article 17 of Directive (EU) 2019/790 on copyright in the Digital Single Market (The Copyright Directive). The aim of the dialogue meetings was to hear stakeholders’ views and discuss possible practical solutions for the application of Article 17, including actions to be taken regarding unauthorised content uploaded to online content-sharing service providers. Following a series of scheduled stakeholder dialogue meetings, the Commission published a document which gathers the views of participants. To conclude the dialogue process, the Commission is inviting the feedback of participants on the Commission's initial views regarding the guidance by the deadline on 10 September 2020. See: LNB News 28/07/2020 90.


Employment

Coronavirus (COVID-19)

Nine out of 14 of the ’Working safely during coronavirus (COVID-19)’ guidance documents published originally by BEIS have been updated again to amend and add advice on when to wear face coverings, disposing of face coverings and PPE, working from home, mass gatherings, ventilation and work-related travel. See News Analysis: BEIS ‘Working safely during coronavirus’: nine of 14 workplace guides updated.

From 27 July 2020 people will be asked to wear face coverings in public areas of courts and tribunals buildings in England in order to mitigate and prevent the spread of coronavirus (COVID-19). See: LNB News 24/07/2020 76.

Employment contract

Not all contracts are of the kind that gives rise to an employment relationship. In some cases, having determined that there is a contract, a tribunal should determine whether the contract should be classified or categorised as one of employment or some other type of contract instead, considering all the relevant factors, potentially including an examination of the dominant purpose of the contract, according to the EAT in Varnish v British Cycling Federation (UKEAT/0022/20/LA (V)). See News Analysis: When a contract falls outside the employment field altogether (Varnish v British Cycling Federation).


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About the author:
Allison is a former partner of Shoosmiths, with extensive experience of legal management and practice compliance.